IRFU CEO Philip Browne yesterday signposted Irish Rugby’s roadmap out of the Covid-19 lockdown for the rest of the year but warned the governing body was spending “tomorrow’s money today” just to stay afloat.
A target date of August 22-23 has been set for the first competitive professional games since the season was suspended in early March but Browne admitted the IRFU was burning through its cash reserves and that losses of €15-20m will be incurred if the 2020 Six Nations are not completed and this autumn’s scheduled home Test matches cancelled.
The frailties of the professional sports economy have been exposed across the world following the pandemic-enforced shutdown of leagues and competitions since late February.
Ireland still has two Six Nations matches, at home to Italy and away to France, to complete, Leinster and Ulster are yet to play their Heineken Champions Cup quarter-finals and all four provinces still have a Guinness PRO14 campaign to conclude. It has become patently clear the IRFU needs every one of those outstanding matches played.
Yet the stark warnings from Irish Rugby’s chief executive came within hours yesterday of rare good news in recent times of a financial windfall as the board of the PRO14, of which the IRFU is a member, announced the completion of a “significant strategic partnership investment” from CVC Capital Partners in exchange for a 28% share of the five-nation league in which Ireland’s provinces participate.
The IRFU will receive €33.5m over the next three years, €5.5m of which was transferred into the Lansdowne Road coffers yesterday. Yet unless competitive rugby returns promptly, there is a danger that money will be merely papering over the cracks laid bare by economic downturn.
CVC’s investment, following a similar partnership forged with the English Premiership and an imminent one with the Six Nations, of which the IRFU is also a board member, was “hugely welcome, and an enormous vote of confidence in rugby,” Browne said during an online IRFU media briefing yesterday.
Yet he added: “All this is against a background where the IRFU’s cash reserves are likely to be exhausted within a matter of months.
“Some of the cash we’re using is actually cash which would have been effectively from the next 10 years. In other words, any monies that would have been received around premium seats. So, we’re spending tomorrow’s money today in order to keep afloat.
“Fundamentally, what we’re going to have to do is adjust our cost base and there’s no way around that. There’s going to end up being a pretty severe market adjustment I would say within professional rugby around the world. You’re already seeing some of the implications of that.”
Browne acknowledged the IRFU’s share of the CVC investment and a new collective Six Nations TV deal to also include the autumn internationals would ease some of the pain but Irish rugby’s cost base would need readjustment, certainly if that target date for a return to play for the provinces and Test matches in October and November fall victim to a return to lockdown restrictions.
“We’ve obviously hit a revenue cliff. There’s no revenue coming into the provinces, the IRFU’s revenues have dried up. The only revenues that will be generated are those by professional rugby in terms of competitive matches so what we have to do is we have to get back playing competitive, revenue-generating matches as soon as we possibly can.
“And I suppose our variations there is playing behind closed doors and then there’s playing with full attendances and everything that lies between the two ends of that particular spectrum.
“I think that what we’ve said is that if we lose the tail end of the 2020 Six Nations and we lose the autumn internationals and can’t play those, that’s going to cost us €15-20m.
“If we play behind closed doors, and we can still play those matches and finish off the season and still have the autumn internationals, if we do that behind closed doors that costs us €10-15m.
“So even if we play behind closed doors it doesn’t resolve the financial difficulty that we’re going to be facing into. If we lose the Six Nations in 2021 you’re talking about a €30m loss.
“If we have to play behind closed doors in Six Nations in 2021, we’ll be
losing around €16m in terms of gross revenues.”
Browne admitted the IRFU would reach a point where it would have to cease its pay deferral scheme under which all employees, including coaching and playing staffs under national and provincial contracts earning more than €25,000 agreed to defer between 15-20% of their wages.
“I don’t think we can continue that indefinitely because what you’re building up is a liability month on month on month on month and we can’t have a situation where that continues indefinitely.
“We’re happy to do it at the moment but if the situation doesn’t become clearer as to when we can generate revenues well then that obviously has to be looked at along with the rest of our cost-base,” he added.